Simplified Joint-Stock Company (SAS) Governance: Statutory Formalism Reaffirmed by Court of Cassation
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SAS, Simplified Joint-Stock Company, company law, statutes, governance model, contractual freedom, Commercial Code, Article L2275, management organization, statutes formalization, Court of Cassation, corporate governance, SA transformation, SAS regime, company management, statutory requirements, French law, business organization, corporate law practitioners, articles of association.
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Abstract
The Court of Cassation has ruled that a Simplified Joint-Stock Company (SAS) cannot maintain a board of directors if its statutes do not explicitly provide for it, emphasizing the importance of formalization in the SAS regime. This decision clarifies that the organization and management of an SAS are exclusively determined by its articles of association, and any arrangement not mentioned in the statutes holds no legal value. The judgment serves as a warning to practitioners of company law to exercise heightened vigilance when drafting the articles of association of SAS, particularly in the context of transforming a SA into an SAS. The ruling underscores the primacy of statutes in the organization of an SAS, stating that its internal organization cannot be determined by practice, external agreements, or simple mentions in official documents. As a result, companies must ensure that their statutes are comprehensive and up-to-date to avoid potential disputes and ensure compliance with the law.
Extract
[...] However, according to them, a manager cannot claim an employment contract if he does not prove the actual exercise of a position distinct from his managerial functions. Question of law : A simplified joint-stock company can it maintain a board of directors if its articles of association do not provide for it ? Solution : the Court of Cassation responds negatively. It recalls that according to articles L. 227-1 and L. 227-5 of the Commercial Code, the organization of a SAS is determined solely by its statutes. [...]
[...] Class Notes If, following a transformation of a social form (absorbed), is it what we calque the regime of the SA on a SAS? knowing that we could say that the SAS is a simplified SA, and that we have seen that we can provide by the statutes a similar mode of organization. Here, NO, the statutes do not provide for a SA. [...]
[...] In defense, the SAS and the assignee company we have requested the application of the price reduction clause to shareholder. Procedure : The Paris Court of Appeal, by a judgment of 24 June 2014, condemns the SAS to pay a retirement indemnity to majority shareholder and apply the revision clause of the sale price of shares to majority shareholder. Means : The majority shareholder and the the lending company of the SAS then they lodge an appeal in cassation, arguing that the court of appeal held that majority shareholder had retained the quality of administrator after the transformation of the SA in SAS", based on documents attesting to the maintenance of a board of directors. [...]
[...] A scope limited to internal management bodies? - A question remains as to the exact scope of this decision: must we understand that any arrangement of the management of a SAS must imperatively be included in the statutes, or can it be completed by infra-statutory documents? - Two possible interpretations are: A strict reading : only the statutes can determine the direction of the company, and no external document (shareholders' pact, internal regulation) can provide for the existence of an organ not mentioned in the statutes. [...]
[...] Meaning / Value / Scope (Doctrine of Laurent Godon) : is inscribed in a logic of clarification of the SAS regime, in reaffirming a fundamental principle of company law : the organisation and management of a SAS are exclusively determined by its articles of association. This decision perfectly illustrates the specificity of the SAS here, unlike the SA, it does not rely on a pre-established governance model by law but on a < b >statut liberté contractuelle quasi absolue, under certain imperative rules. 1. The primacy of statutes in the organization of the SAS - Article L. [...]
